Applying the Federal Communications Commission’s 2015 Declaratory Ruling and Order, a Florida federal court agreed with a defendant in a Telephone Consumer Protection Act dispute that the plaintiff failed to allege the use of an automatic telephone dialing system (ATDS).
Verizon referred an account to The CBE Group Inc. for collection that included the phone number of S. Ryan Strauss. CBE then placed 26 telephone calls to Strauss over a six-month period seeking to collect on the debt.
Strauss responded with a putative class action suit against both CBE and Verizon. CBE conceded that the first two calls made to Strauss utilized a predictive dialer under the mistaken belief that the phone number was a landline. But the remaining calls were made using the company’s patent-pending Manual Clicker Application (MCA) which CBE argued did not constitute an ATDS because it requires an agent to manually initiate the call by clicking a computer mouse or pressing a keyboard “enter” key. Verizon argued that it could not be vicariously liable under the statute.
All parties filed motions for summary judgment. U.S. District Court Judge James I. Cohn generally sided with the defendants, dismissing the claims against Verizon and granting summary judgment in favor of CBE on the 24 calls made with the MCA system.
The TCPA defines an ATDS as “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator, and (B) to dial such numbers.” In last year’s Declaratory Ruling, the FCC expanded this definition and explained that the term “capacity” refers not only to a device’s “present capacity” or “current configuration,” but also includes its “potential functionalities.”
For the court to determine whether a dialer is a predictive dialing system and an ATDS, its “primary consideration” is “whether human intervention is required at the point in time at which the number is dialed,” Judge Cohn said.
Strauss failed to create a genuine dispute with regard to CBE’s last 24 calls. By itself, the MCA lacked the capability to dial predictively, the court said, and the “overwhelming weight of the evidence” indicated the equipment it utilized to connect calls did not change that calculus.
In an affidavit from a CBE executive, the defendant explained that after a company representative clicked to initiate a call, the MCA used connecting devices that only allowed for “pass-throughs” and were incapable of doing any type of automatic outbound dialing. It therefore lacked the capacity to store, produce, or dial numbers using a random or sequential number generator.
“Because CBE has presented substantial evidence that human intervention is essential at the point in time that the number is dialed using the MCA and that the [equipment] used does not have the functionalities required to classify it as a predictive dialer, Defendants have made a prima facie showing that they are not liable as a matter of law for the calls made after April 15, 2014,” the court said.
The plaintiff’s expert was unable to overcome this showing, the judge added, as he did not address the capabilities of the equipment CBE used with the MCA, but “merely assume[d]” that CBE used a predictive dialer for all of its calls, as it admittedly used them for landline calls. The plaintiff’s expert report was therefore “insufficient to create a genuine issue of material fact regarding the dialing service that CBE used,” the court concluded.
Turning to the question of Verizon’s vicarious liability, Judge Cohn again found that the plaintiff failed to create a genuine dispute. None of the evidence demonstrated an agency relationship between Verizon and CBE where Verizon exercised “substantial control” over the agent’s actions, ratified CBE’s conduct, or made representations that CBE acted with authority.
While CBE provided Verizon with limited access to its information and systems so that Verizon could conduct quality control measures such as performing random audits of CBE’s collection calls, conducting on-site visits every six to nine months, and reviewing collection reports made available by CBE through its client portal, this “quality control falls short of establishing ‘substantial control’ or apparent authority by the FCC’s standards,” the court wrote.
Nothing in the evidence suggested that Verizon gave CBE access to its systems, authorized CBE to use its name or marks, or knew that CBE was violating the TCPA and failed to stop it, the judge wrote. “Even if Verizon participated in the preparation of the transcript read by CBE agents, on balance, this evidence is insufficient to create an issue of disputed material fact for trial regarding an agency relationship between CBE and Verizon.”
The court found, however, that Strauss was entitled to summary judgment on the first two calls from CBE, as the defendant conceded that it used a predictive dialer to make the calls to the plaintiff’s cell phone. Judge Cohn ordered CBE to pay statutory damages of $500 per call for a total of $1,000.
To read the order in Strauss v. The CBE Group, Inc., click here.
Why it matters: The order discusses two hot topics in TCPA law: what constitutes an ATDS and the standard for vicarious liability. In both instances, the defendants emerged victorious in Florida federal court, with the judge determining that Verizon’s quality control access to CBE’s operations did not rise to the level of “sufficient control” to demonstrate an agency relationship for purposes of vicarious liability. And even the FCC’s 2015 Declaratory Ruling that expanded the scope of an ATDS to include “potential functionalities” could not save the plaintiff’s argument that the system used by CBE violated the TCPA where the company was able to show that “human intervention [was] essential at the point in time that the number is dialed.”